The U.S. Chamber’s Defective Litigation Machine

In 1998, I founded the first consumer organization in the nation with an exclusive mission to halt and reverse the momentum for so-called “tort reform”- laws that limit everyday people’s access to the civil courts. That same year, the U.S. Chamber of Commerce created its Institute for Legal Reform (ILR) to pursue the Chamber’s national tort reform agenda. I guess you could say the comparisons end there!

Many people know that the U.S. Chamber is the number one lobbying force in the nation. But you might not know that ILR has enormous lobbying muscle of its own. U.S. Chamber of Commerce President Tom Donohue boasted in 2014, “Our Institute for Legal Reform is fighting the expansion of lawsuits on all fronts—in the Congress, in the federal agencies, in the states, and even around the globe where U.S. companies are getting sued.”

As you might imagine, Mr. Donohue objects only to certain kinds of lawsuits. His problem is with the 7% of civil cases (and decreasing every year) brought by sick, injured and harmed consumers against corporate lawbreakers. Of the rest, 80 percent are brought largely against consumers by Chamber members like banks and lenders (37% are debt collections, 17% are foreclosure). He has no problem with those. Since the last recession, these kinds of “contract” cases have been expanding by about 11 percent a year.

The Chamber’s view of litigation seems to be the height of hypocrisy - yet it gets worse. The U.S. Chamber itself prides itself on its very own “litigation center,“ which files suit, on average, three times a week. For example, it has just threatened to file a lawsuit aimed at invalidating the new Labor Department rules, which impose “stricter limits on brokers handling retirement accounts.”

One of the Chamber’s other priorities right now is to stop the Consumer Financial Protection Bureau (CFPB) from issuing a rule to limit use of “forced arbitration” clauses found in most consumer contracts today. Big businesses bury these clauses in the fine print of most credit card, cell phone, online “terms of use” agreements, nursing home admission forms and many other everyday contracts, including employment. If you find yourself subject to one of these clauses, it means that if the company cheats, defrauds, discriminates against, physically injuries or otherwise harms you, you cannot sue the company in court or have a jury trial. Instead, you are forced to resolve your dispute is a private, secretive, rigged arbitration system controlled by the company. You may have to pay for the arbitrator. And there is no right to appeal.

The general unfairness of forced arbitration is likely why the Chamber’s own corporate members “seldom impose such agreements upon themselves.” Or as the late Cornell law professor, Theodore Eisenberg, told the New York Times,, “Companies say that arbitration is ‘a fair and cost-saving process,’ ... but ‘if they believe that is true across the board, why don’t they insist on it when they contract with one another?’” The simple answer is, they don’t believe it’s a “fair and cost-saving” process for those forced into it. But as we’ve seen already, one would be hard pressed to find bigger “tort reform” hypocrites than the U.S. Chamber of Commerce.

A year ago, the CFPB released an extraordinary study - over 700 pages long - finding that these clauses (which now usually include class action bans that keep consumers from joining together with others), result in the disappearance of claims and immunity for corporate wrongdoers. Based on this hard data, the agency has released a proposal that would to prohibit companies from banning class action lawsuits, or in their words, “ban companies from using arbitration clauses as a free pass to avoid accountability.”

Ever since, the Chamber has tried to bully the CFPB and get Congress essentially to shut it down. There have been non-stop efforts to defund the agency, to completely change its structure so it can’t effectively function, and to demand that Congress intervene to force the agency to “reopen” this arbitration study. The Chamber wants to delay any sort of rulemaking, arguing that this massive, painstakingly-researched empirical study wasn’t comprehensive enough. The latest effort came during Chamber testimony at the April 5, 2016, Senate Committee on Banking, Housing and Urban Affairs Committee hearing.

This remarkable agency, the CFPB, is going to need everyone’s assistance to help fight back against the continuing assault by the hypocritical and harmful U.S. Chamber of Commerce, which continues to undermine the CFPB’s work and indeed its very existence. Let the CFPB - and your member of Congress - know how much you appreciate what they’ve done, and hopefully will continue to do, standing up to corporate bullies on behalf of consumers everywhere.